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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: I. N. Vester who wrote (9247)	3/13/1999 3:56:00 PM
From: Larry Brubaker	Read Replies (1) \| Respond to of 27311

IN Vestor, you are wrong. First of all, a floorless variable rate financing is the option of last resort for companies with few other choices for raising money. No company would risk unlimited dilution of their stock if they had other means of raising money. Second, both Zeev and I have acknowledged that this floorless is a "kindler and gentler" version of a straight floorless. It is kinder and gentler in that the floorless provisions do not kick in for 6 months. This "grace" period gives VLNC the opportunity to perform before the potential for massive dilution can be realized. Third, this is a wonderful deal for Castle Creek because it allows them to make money no matter what happens. If the price goes up, they can make money. If the price goes down, they can make money. All Zeev is suggesting is that they are hedging their bets by shorting (and taking their money off the table) when it becomes profitable for them to do so. It becomes profitable for them to do so when the price rises far enough above the fixed conversion price of $6. <<The fact is that CC has an unhedged long position of 1M+ shares.>> You don't know that this statement is a fact. All you know is they still have 1.3 million shares from the first tranche. You don't know whether they have hedged against that position or not. I suspect they have.

To: I. N. Vester who wrote (9247)	3/13/1999 4:32:00 PM
From: FMK	Read Replies (1) \| Respond to of 27311

Another reason for a "frenzied attack". I spoke with someone who took delivery last week of almost 100,000 shares of stock by exercising his March $5 calls, most of them late in the week. Whoever was on the other end of these calls is required to deliver the stock at $5. That person(s) would have written (sold) the contracts and collected the money at an earlier date, hoping the stock never made it to $5. At any rate, if the person owned the stock at the time, he would have had to turn it over at $5 per share. If the person didn't own the stock, he would still be still be required to hand over the shares at $5. If these options were exercised late in the week, he might have 3 trading days to buy the stock on the open market in order to fulfill the requirements. Could this help explain why new posters have turned up, going as far as calling Valence a fraud and hoping to shake lose a few cheap shares from impatient longs? With this in mind, a strategy for longs might be to add to their positions early next week and hold, to force the shorts and whoever bet against Valence to cover at higher market prices!